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18 Cards in this Set
- Front
- Back
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GAAP - Primary Qualitative Characteristics |
1. relevance 2. faithful representation |
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GAAP - Enhancing Qualitative Characteristics |
1. comparability 2. verification 3. timeliness 4. understandability |
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GAAP - Assumptions |
1. entity 2. going concern 3. time period 4. unit of measure |
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GAAP - Principles |
1. historical cost 2. revenue recognition 3. matching 4. full disclosure |
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GAAP - Constraints |
1. materiality 2. cost benefit |
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define GAAP |
the rules of financial reporting for business enterprises |
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3 aspects of GAAP financial reporting |
1. recognition 2. measurement 3. disclosure |
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What is the role of the SEC? |
US agency that administers all securities laws -affect firms that issue debt and equity securities to the public |
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What is the role of the FASB? |
-one of three parts of current accounting standard-setting mechanism -establishes financial accounting standards for business entities -subject only to FAF -part of the private sector |
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What is the Financial Accounting Foundation? |
parent body; appoints the members of the FASB and its advisory councils -ensures adequate funding for FASB -oversight over FASB |
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What is the FASAC? |
-provides guidance on major policy issues, project priorities and task forces |
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5 parts of the mission of FASB |
1. improve the usefulness of financial reporting 2. maintain current accounting standards 3. promptly address deficiencies of standards 4. promote international convergence of standards 5. improve the common understanding of the nature & purposes of info in financial reports |
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4 brief facts about the FASB |
1. 7 full-time members 2. subject to FAF policies and oversight 3. members must be independent 4. members DON'T need to be CPAs |
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4 FASB principles in promulgating GAAP |
1. accounting standards should be unbiased 2. views of accounting community should not take precedence 3. process of developing standards should be open to public to allow due process 4. benefits of standards should exceed cost |
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FASB process of issuing accounting standards |
1. considers whether to add project to agenda 2. conducts research; issues Discussion Memorandum 3. holds public hearings 4. evaluates research and comments; modifies if needed 5. solicits additional comments; modifies if needed 6. finalizes new guidance & approves with majority vote 7. issues an Accounting Standards Update |
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describe the Emerging Issues Task Force |
-acts as a "filter" for FASB -EITF pronouncements are included in GAAP -FASB becomes involved to resolve issues |
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how can outside groups affect the outcome of FASB standards? (3 ways) |
1. make views public via the press 2. providing input during due process 3. putting pressure on SEC directly |
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how is GAAP enforced? |
-economic sanctions -sends "deficiency" letter -can prevent trading of firm's securities |
